Swiggy share jumps 9%, hits record as Axis Capital initiates with 'Buy'

Swiggy share price: Shares of Swiggy, India’s second-largest player in food delivery and quick commerce, were in demand on Monday, December 16, 2024, as the scrip soared up to 9.46 per cent to hit an all-time high (record high) of Rs 582.90 per share.  However, at 2:44 PM, Swiggy share price stood at Rs 575.05 apiece, up 7.99 per cent. By comparison, BSE Sensex was trading 0.41 per cent lower at 81,799 levels.

 

The northward move in the Swiggy share price came after the domestic brokerage Axis Capital initiated coverage on Swiggy, with a ‘Buy’ rating and a target price of Rs 640 per share. The target indicates a potential upside of 20 per cent from its previous closing price of Rs 532.50 on December 13, 2024.  Also Read: After Zomato, Swiggy taps live events ticketing space with Scenes 

Analysts at Axis Capital view Swiggy as a compelling investment opportunity, leveraging its strong position as India’s second-largest player in both quick commerce and food delivery.

 

“We expect a 38 per cent revenue compound annual growth rate (CAGR) (FY24-27E) with food/q-com at 23 per cent/84 per cent, adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 390 crore in FY27E (-Rs 1,840 crore in FY24). Sum-of-the-parts (SoTP)-based target price (TP) (March’27E) at Rs 640; food/q-com at 10 per cent/20 per cent discount to Zomato/Blinkit,” said Gaurav Malhotra and Della Desai of Axis Capital.

 

Meanwhile, here are the top factors for initiating coverage:

 

Massive growth potential in Quick Commerce (q-com) & food delivery

 

Analysts see major opportunities in the quick commerce (q-com) market, projecting a gross order value (GOV) of approximately $6.8 billion by FY25E, growing substantially to around $32 billion by FY30E, based on MOSPI’s PFCE data. The convergence of q-com and horizontal commerce, coupled with evolving user behaviour, analysts believe, is driving this growth.

 

Industry checks reveal that market players are focusing on assortment rather than aggressive pricing, creating a sustainable growth model. Thus, Swiggy stands to benefit from its rapid expansion of dark stores and enhanced product offerings. Additionally, food delivery—operating as a duopoly—remains underpenetrated, leaving room for growth. Innovations like Swiggy’s ‘Bolt’ for quick food delivery further add to its prospects.

 

Improving profitability and margin expansion

 

Swiggy’s quick commerce arm, Instamart, is scaling up effectively, enabling higher brand commissions and ad revenues. The company’s ongoing improvements in both fixed and variable costs are expected to sustain, supporting profitability, analysts highlighted.

 

While food delivery, being a more mature segment, may see incremental gains, analysts noted, the q-com business offers major room for margin expansion. Additionally, efforts to optimise delivery costs and control fixed expenses represent actionable opportunities for efficiency improvements in both segments.

 

Leadership, innovation, and strategic restructuring

 

Swiggy has consistently demonstrated strong innovation capabilities, being an early leader in both food delivery and q-com. Although it lost its leadership position to Zomato—likely due to Zomato’s stronger execution—analysts note that Swiggy’s organisational restructuring has strengthened its position.

 

The shift from a founder-driven model to a professionally managed organisation, along with a team of experienced industry veterans, boosts its ability to innovate and execute effectively. These factors, analysts said, should help Swiggy remain a key player in its business segments.

 

Key risks, analysts believe, include a potential slowdown in consumption affecting food delivery demand, the threat of disruptive competition in quick commerce, and a slower-than-expected ramp-up in quick commerce gross order value (GOV) and profitability.

 

Swiggy IPO 

 

Swiggy made its highly anticipated stock market debut last month on November 13, 2024, following the closure of its initial public offering (IPO). Swiggy shares listed at Rs 412 on the BSE, reflecting a 5.6 per cent premium over its IPO allotment price of Rs 390.The performance  was even stronger on the National Stock Exchange (NSE), where Swiggy shares opened at Rs 420, delivering a 7.6 per cent premium to its IPO price. READ MORE

 

  About Swiggy

 

Swiggy is an online food delivery and logistics platform based in India, offering a wide range of services beyond food delivery. Founded in 2014 and headquartered in Bangalore, Swiggy allows customers to order from a variety of restaurants, browse menus, and track deliveries, all without any minimum order requirement. 

 

In addition to its core food delivery service, Swiggy also provides quick commerce with Swiggy Instamart, which delivers groceries and essentials in just 10 minutes, and Swiggy Genie, a service for same-day parcel and document deliveries.

 

Swiggy operates in over 580 cities across India and has expanded its offerings with Swiggy One, a membership program that provides exclusive benefits on food, quick commerce, dining, and pick-up and drop services.